Thought Leadership – Page 10 – Asia School of Business

From a trading post in Johor Bahru, Malaysia, buying and selling rice, sugar and wheat flour, the Kuok family – behind the internationally renowned Shangri-La Hotel chain – has built up an empire that spreads across five continents today. No longer merely a trader, the family does business in the property, hospitality, logistics, and maritime industries, just to name a few. This has pushed the family’s net worth to US$16.6 billion last year, making it the 15th richest family in Asia.

The Kuok family, headed by Robert Kuok, has also crossed the so-called valley of death for family businesses, with second- and even third-generation members of the family helming and managing certain arms of the corporation. According to a 2012 Harvard Business School study, 70 percent of family-owned businesses fail or are sold, before the second generation gets a chance to take over.

The statistics get more disheartening with each generation, with only 10 to 15 percent of family businesses making it through the third generation and 3 to 5 percent through the fourth. Perhaps the most famous example of dissipated wealth is that of the Vanderbilts, once one of the wealthiest families of the late 19th century.

At its height, the Vanderbilts’ fortune totaled over US$240 billion in today’s dollars. But its descendants lived lavishly, with little concern for preserving the family fortune. By the 1970s, not a single Vanderbilt millionaire remained. Why do some family businesses grow and thrive and others fail?

Family ties that unbind

While the answer to this question remains elusive, research by Dr. Ambra Mazzelli from the Asia School of Business (ASB) has theorized how social capital – the goodwill associated with an individual’s and/or organization’s social ties– can influence strategic decision-making.

The world-class business graduate school based in Kuala Lumpur is a collaboration between Bank Negara Malaysia and Massachusetts Institute of Technology’s Sloan School of Management. It was founded in 2015 in response to the need for highly qualified, industry-ready visionaries and entrepreneurs, to help organizations take advantage of the abundant opportunities that this Asian century is offering.

Dr. Mazzelli’s research shows that social capital is key in influencing strategic decisions in family businesses. Here, a student from Asia School of Business on her MBA project at a family business. Assistant Professor of Management and Organisations at ASB, Ambra Mazzelli, said social capital ultimately determines whether small family firms take the same route as the Kuok Group, potentially evolving into iconic, complex, and diversified organizations.

A paper on the research conducted together with Assistant Professor Robert Nason and Professor Michael Carney from Concordia University in Canada has been published in the October 2019 issue of Academy of Management Review – the most influential business journal worldwide.

The key to success, it seems, for business-owning families, lies in keeping their doors open to people both within and outside the family circle. Such extensive socialization affects how these families experience, filter, and interpret the external environment, which enables them to break free from old strategic frames – what one sees in its assessment of the world, including relevant competitors and how to create value – and make less conservative strategic decisions.

“Specifically, the integration of next-generation family members in decision making reduces the uniformity of interests, values, and beliefs, and simultaneously urges some degree of open discussion and exchange between existing and newly admitted family members,” she said. This, she says, “de-anchors” the business-owning family from a focus on the past and facilitates the identification and pursuit of new opportunities.

This ability to look beyond past success appears evident in Kuok Group, which has diversified extensively, with the help of next-generation family members. Today, it owns the luxury Shangri-La hotel chain, whose Asia division is headed by a member of the second generation. One of Robert Kuok’s sons leads Asia’s largest operator of offshore oil-and-gas exploration vessels, PACC Offshore Services Holdings, and a third son is a director at logistics and supply chain company Kerry Logistics.

Meanwhile, his nephew has co-founded Wilmar International, a giant in the palm oil industry. The family’s third generation is active in several of the group’s companies.

Outsiders offer a fresh perspective

Aside from next-generation family members, openness to influences from outside of the family circle, such as social class peers, also helps business-owning families consider growth opportunities without prejudice. Said Dr. Mazzelli: “Business-owning families who have a richer understanding of the dynamics of their environments and the structure of their industries may be better equipped to identify, act on, and legitimize opportunities.”

She added that professional advisors, such as lawyers, accountants, and professional trustees, thanks to their expertise, can offer a fresh perspective and invite family decision-makers to question their convictions and appreciate alternative viewpoints. It is a confluence of influences from socialization that pushes business-owning families to look outwards for opportunities and to undertake unusually bold strategic actions.

This, in turn, may help get them to grow from the family business to conglomerate, just like the Kuoks.

The Asia School of Business (ASB) is Established in Collaboration with MIT Sloan School of Management with the vision of becoming a talent magnet and multiplier for the region. We offer Extraordinary & Unconventional programs (MBA full-time and MBA for working professionals) for aspiring business leaders and an array of Executive Education courses for corporate clients. For more information about Asia School of Business and programs on Family Businesses, just email us at corporatedevelopment@asb.edu.my.

Ambra Mazzelli is an Assistant Professor of Management and Organizations at Asia School of Business (ASB) and an International Faculty Fellow at MIT Sloan School of Management. Ambra’s research interests lie in studies surrounding organization and management theory, with special concern to how these dynamics affect change in family and non-family firms.

KUALA LUMPUR: The Asia School of Business (ASB) was announced as the 2019 Innovator Award winner in the Early Stage Innovation category by the MBA Roundtable. The award recognizes the school’s leadership in initiating and achieving curricular reform through its use of Action Learning in its MBA Programs, beating top business schools in the process.

Created in 2011 by the MBA Roundtable to promote educational initiatives that advance innovation in MBA education and to acknowledge institutions that drive change in the field, the Innovator Award raises awareness of ongoing continuous curricular and co-curricular improvements and educates employers, business school leaders, and faculty about innovative practices of best-in-class MBA programs.

Business schools that offer an MBA degree and have taken initiatives such as program revisions, course content or delivery changes, or co-curricular experiential learning opportunity are eligible to participate. Initiatives are first evaluated on concept, execution, and impact; finalist schools are identified and interviewed and one school is selected as the award recipient in each category.

Finalist and recipient school initiatives cover every aspect of the content-pedagogy-format curricular framework with impact reach locally and globally, and with benefits to the learner, business and community. “ASB’s unique value proposition is to deliver high quality education through an intense action learning curriculum. Our Action Learning modules creates productive opportunities for our students in each of the 5 semesters they are with us to engage with partner companies across the region and beyond in month long projects of various range and focus.

Since 2015, ASB has partnered with more than 127 companies on over 237 projects in over 20 countries around the world,” explained Prof. Loredana Padurean, Associate Dean and Faculty Director for Action Learning. “Receiving the Early Stage Innovator award from the MBA Roundtable is an important validator for our ambitious start-up filled with so many extraordinary goals.

We want to thank not only the selection committee for the acknowledgement but especially all members of our community: students, faculty, staff, corporate partners and supporters of the school who made this happen,” she added. “

Mens et Manus (Mind and Hand), has been the motto for MIT Sloan since its inception in the 19th century. In today’s business world, this motto is as relevant now as ever, because the world needs leaders and changemakers who can be actively engaged in bringing leadership to a mature organization, as readily as they would in a hands-on role, building a start-up.

Our ASB graduates not only earn an MBA that is embedded with MIT Sloan DNA, but also gain an Asian perspective and an entrepreneurship mindset in the process. On behalf of the entire team at Bank Negara Malaysia, MIT Sloan and the extraordinary and unconventional ASB community, we want to thank you for this award that recognizes all of our collective efforts,” said Professor Charles Fine, President and Dean of ASB.

Between juggling back-to-back classes, participating in extracurricular activities and navigating professional pursuits, it is unsurprising that MBA students sometimes feel overwhelmed by their ever-expanding to-do list. How should MBA students think about maximizing their experience within and beyond the classroom?

“No matter what your career aspirations are, you should begin by thinking carefully about why you are engaging in any activity and what you can expect to get out of it,” writes Robert Pozen in his book Extreme Productivity: Boost Your Results, Reduce Your Hours. Pozen is a Senior Lecturer at the MIT Sloan School of Management, former president of Fidelity Investments and executive chairman of MFS Investment Management.

Given Pozen’s extensive experience juggling multiple hats across academia, finance, government, law, and journalism (just to name a few), I sat down with the productivity guru to draw insights on how students can boost their productivity to make the most of their time in business school.

Work smarter by identifying your priorities

The key to learning is becoming conscious about what you want to get out of the experience. Given an MBA’s regimented academic schedule, it is important to ask yourself these questions:

What are your priorities?
Which classes are the most important to you?
What do you hope to get out of these classes?

With finite time and competing priorities, it is crucial to be intentional about how you are spending your time and to devise a strategy to optimize your productivity. Pozen recommends the following: The night before class, review your schedule with your top priorities in mind. These priorities are the yearly goals that are operationalized through weekly goals.

Think about what you wish to focus on and how you will allocate time to prepare for your classes. He also suggests jotting down your objectives next to each event in your schedule. This will help align your daily activities to the yearly goals that you have identified.

Rethink how you read and write

According to Pozen, one of the things that characterizes productive people is that they always think before they act. How can students incorporate productivity principles into the act of reading and writing? “There are some materials that you read for background information and others that you read for a close textual analysis. To ensure that you are able to efficiently retain the information that you have read, you have to be clear about your purpose for reading before you read anything,” Pozen says.

With writing, the key is to first understand the logical order of your argument. Next, write an outline before you write anything substantive. An outline will keep you on track by putting the logical order of your arguments on paper. If you don’t do that, you will have a hard time figuring out what you are trying to communicate. Pozen also encourages students to start thinking about the exam or final paper midway through the semester instead of at the end of the semester. Students need to ask themselves the following:

- Can I go through this course in a way that will prepare me for the exam?
- What sort of questions are on the exam?
- What areas do I need to cover?

For research papers, Pozen warns against waiting until the end to synthesize the data, suggesting instead that students should start writing a tentative conclusion after carrying out 2 days of research. “If you wait until the end, you may end up with unimportant information or risk losing out on critical information,” he notes.

Every research paper has analytical issues, which you should try to identify as early as possible. Start with a draft, which you can change every week as you obtain more information. If you keep working on it, you will be gathering the right data in a focused manner.

Map out your career goals

Beyond the classroom, a substantial part of an MBA program is networking. Pozen advocates for students to not only form close bonds with their classmates, but to expand their network by getting to know businesspeople in their communities.

At the outset, map out your career goals (the industry/area you wish to pursue), then think about the companies and people who would have the connections that you desire. “Unless you start off by being clear about the industry you wish to pursue, how would you know who to network with? The more focused you are, the more likely you are to succeed,” he says.

Maximize your options

When it comes to career planning, Pozen believes that students should remain agile as the world is changing at a rapid pace. His theory of how to build a career is to increase your options. “Let’s say you have been a trader on a trading desk and you have two options: more money to move to a different trading desk or an opportunity to be a manager.

You are better off taking the job as a manager, because in five years, you would have managerial experience as well as trading experience. This transferable knowledge will increase your probability of success in the future.” You don’t know what the world will look like in five years or how you will feel about your career at that point in time. As you consider your next career move, make choices that will maximize your options and alternatives.

This article is a continuation of a previous article introducing the field of political economy and its role in the energy industry. Read it here.

Renato Lima de Oliveira, an Assistant Professor of Management at Asia School of Business, studies the connections between political actors and businesses, focusing on the energy sector. While much of his research centers on the oil and gas industry, he also sees a need for countries to transition to renewable energy sources. He believes both government and traditional energy producers have a part to play in this transition.

“The good thing is that renewable technology has advanced so much that it’s the cheapest alternative,” he notes, adding that recent bids for large-scale solar have been as low as USD $0.03 per kWh. But he also notes that economics alone cannot fuel the transition from a fossil-fuel based economy to one focused on alternative energy. The government also has a responsibility to design cost-effective policies that stimulate the new sector.

He cites Germany as a prime example. The country has a high amount of installed solar capacity despite its relatively low level of sunlight. Political factors are what drove the solar industry to develop the way it has. Alternative energy companies also have resources at their disposal to influence their position in politics, including advocacy and coalition-building.

Coalition–building in particular can take interesting forms. For example, the Trump administration in the U.S. has favored the coal industry, leading to a coalition between shale gas and solar producers. Both parties saw the coal industry as a common, and less favorable, enemy, making for an unlikely alliance. In Malaysia, the government has publicly pledged to increase the share of renewables in the country’s energy mix. Malaysia is home to one of the largest manufacturers of solar panels and receives a high level of sunlight.

Given these factors, it would seem that the solar industry is here to stay. But Renato cautions that without a political coalition, pledges may go unfulfilled and pro-renewable policies may not endure over time. Developing these “nonmarket strategies” is at the heart of his research. He answers questions such as, what kind of government support mechanisms can facilitate innovation? Why does Indonesia have a certain business environment? Why can’t Malaysia escape the middle-income trap? He claims each of these economic questions has a political explanation.

From MIT to Malaysia

When Renato first discovered the striking similarities between Malaysia and his native Brazil, he became intrigued. The two countries had a similar per-capita GDP over time as well as a similar level of oil production. Both had state-owned oil companies that were required to invest in local manufacturing and innovation. These similarities prompted him to include Malaysia in his research on energy policy and economics.

He visited ASB just after the school was founded. At the time, the first class of students had not yet enrolled, so he spent his time as a visiting researcher talking to industry experts and poring over documents in the archival library. After receiving his PhD, Renato entertained multiple job offers, but came to Malaysia because he loved its people and relished the chance to help build a business school from the ground up.

“ASB is a transformative project,” he says, “because the school focuses on teaching that is not just theoretical but has a practical component.” He also resonated with the school’s mission to research and reflect on the challenges of doing business in emerging economies. In particular, he sees the central role of politics as a defining characteristic of emerging economies.

“You cannot do anything in ASEAN without thinking about politics,” he notes. “Malaysia is shaped by the presence of GLCs, Myanmar is affected by its new democracy, and Vietnam’s economy is changing under a one-party regime.” He witnessed this firsthand when advising two students completing their Summer Associate Program.

The students worked at a large bank in Myanmar at which there was little bureaucratic structure in place. At the time, the rate of credit growth was high in the country and the central bank’s policies were changing fast. Renato helped the students put together a report for the company that would allow it to adapt to its changing circumstances. One of the students, Eizaz Azhar, says that he landed his post-MBA job in part because of the report.

Renato believes that helping students think through these political scenarios, both in and outside of the classroom, is a crucial part of his job. “My students come to understand how political actors affect the business environment,” he notes, “as well as how business organizations can change their political reality.”

Renato Lima de Oliveira, an Assistant Professor of Management at Asia School of Business, thinks more businesspeople should be thinking about politics. “My course prepares students to become CEOs,” he says. “When you’re in a position to allocate investments, both over time and among different countries, you need to consider more sources of risk, including political risk.”

Renato teaches two courses at ASB. One is focused more broadly on political economy and its applications in business. The other focuses specifically on the energy industry. In his political economy course, he teaches students how to understand and articulate the rules, both written and unwritten, under which businesses operate in different jurisdictions. He claims it is essential to understand political processes and develop a “nonmarket strategy” to ensure success.

He looks at firms as political actors that have to deal with multiple stakeholders when managing their environmental, health, and other impacts. Business leaders must also understand how regulations are developed and passed in order to make informed decisions. When they fail to consider the political environment, there are often huge consequences.

“For example, there are cases of US companies investing in China that misread the rules of the game of Chinese capitalism,” Renato notes. “They complain about the government stealing trade secrets, being forced into joint ventures, or expropriated. This could have been avoided with a knowledge of political economy.”

A new outlook on energy

Renato began his unconventional career as a business reporter, covering many industries including the energy sector. From his reporting, he saw firsthand the massive influence the industry had on other parts of the economy, as well as on people’s lives. In particular, he saw how policies designed to promote the energy supply chain changed the lives of workers who had moved to the sector from other industries such as agriculture.

This shift happened because oil and gas companies were required to invest in local manufacturers. After talking to these workers and their families, Renato knew this was an industry in which he wanted to work. He earned his Master’s degree at the University of Illinois and his PhD at MIT before joining ASB.

His research focused on which factors helped maximize the benefits of energy production, especially the “spillover” effects the industry had on research and development, manufacturing, and the supply chain. Until now, these effects had been left out of the literature.

Not all oil is created equal

To Renato, the way the oil and gas industry is currently studied assumes the same difficulty of extraction in every country. But he has found that differences in accessibility shape the way that energy policy is written, as well as the economic outcomes. To demonstrate this, he studies three countries and their differing approaches to energy policy: Mexico, Brazil, and Malaysia.

“I chose these three countries because they have a similar per-capita GDP over time,” he explains. “However, Mexico’s oil production spiked in the late seventies and has been much higher over the past four decades.” Despite higher production, Mexico’s economy grew no faster than Brazil’s or Malaysia’s. The ease of extracting oil in Mexico meant there was little need to innovate or further develop the economy.

On the other hand, oil companies in both Malaysia and Brazil expanded abroad and developed new technologies. Both countries also required the use of local firms to provide equipment and services, stimulating local economies. Renato found that it was harder for countries with easy access to resources to have an alignment of interests that could lead to investments in technology development and cost efficiency, one potential outcome of a phenomenon called the “resource curse.”

“When you’re under constraints, you have to overcome them, and that’s where ingenuity comes from,” he says. “There are extra benefits from putting the right incentives and policies in place.”

The role of the government

“The energy industry invests 1.8 trillion dollars annually, three-fourths of which is influenced by government or made directly by state companies,” Renato says. “This huge industry is also one of the most political industries in the world.” According to him, the government has three main responsibilities when it comes to energy: accessibility, affordability, and reliability.

In other words, citizens must have access to electricity with few to no outages at a reasonable price, ideally without relying too much on subsidies. It is also important for energy production to be sustainable over time, both environmentally and financially. Governments should invest in the future of energy and help prepare their countries for a transition to lower-carbon energy sources.

Stimulating technology development is also an important part of this responsibility, accomplished by providing both the environment and incentives for innovation. In particular, the business environment must invest in both human resources and research, rewarding not just the incumbents but disruptive firms as well.

The second installment of this article will focus on how renewable energy providers can benefit from the use of political economy, as well as how Renato came to teach at ASB.

Dato’ Ariff is a former Chief Information Officer at Standard Chartered Bank Malaysia. There, he oversaw the full spectrum of Technology and Operations and was responsible for systems development, technology support and banking operations for the Bank’s retail and wholesale banking businesses in Malaysia. His 28+ years of experience in the banking industry spanned across multiple countries and geographies.

He is a thought leader and is skilled in innovation, digital transformation, banking operations, digital banking, credit cards, financial technology (fintech) and Open Banking. In March 2019, Standard Chartered was among the first three organizations that received a virtual banking license from the Hong Kong Monetary Authority.

ASB student Saloni Saraogi (MBA Class of 2019) interviewed Dato’ Ariff about his thoughts on the growing trends of digital banking and fintech. Read on to discover insights about where this industry might be headed in the near future.

Why is digital banking a big business opportunity that attracts even non-financial players such as Grab and AirAsia?

The concept of digital banking is not new and has been in existence for many years. For instance, in Europe we have N26, Revolut, and Atom Bank. However, the term has become popular only in the past 5-8 years. Initially, the struggle was regulatory in the sense of acquiring a banking license. Europe has been at the forefront [of this movement] and is moving to Open Banking. This has led to a lot of activity in the virtual banking space in that region.

Asia is catching up. Grab, AirAsia, Paytm and many other non-financial players want to enter into this market. However, most of the success stories have been on the payments side, and this is primarily because cross-border payment costs are lower in digital banks when compared to traditional banks. Digital banking has been a big business opportunity and there has been chatter everywhere that the next banking generation is virtual banking and [brick-and-mortar] banks will be wiped off.

However, in my view, retail banking is the sector that is currently being disrupted the most and no bank will be wiped off. Banks provide services in many other areas such as corporate, trade, and securities, and the disruption in these areas will take time. Customer behaviors and mindsets are changing with respect to digital banking and there is a race to be the first to grab this opportunity.

What are the implications of a digital bank for non-financial players and financial players?

Clearly customer preferences are changing. When we look at the basic rationale as to why customers keep their money in a bank, the underlying and most important reason is trust. People feel that their money will be safe in a bank and can be withdrawn at any time. With trust in mind, more and more people are now using services by non-financial players. Alipay and WeChat offer wallet services which allow customers to keep their money safe.

It is not surprising to see that their penetration rate has been extremely high. Grab has announced its entrance into financial services and I believe that Grab Pay will fly. People want to pay online, and these are small amounts so there is no big risk. If traditional banks have millions of customers, bigger tech giants such as Google and Facebook have billions of customers.

These tech giants are currently in the initial learning phase, but once they enter into the digital banking and payment space, they can give serious challenges to existing traditional banking systems and the competition will then reach a global scale.

What do you think is the biggest challenge traditional banks face in their move to become a digital bank and how can they overcome this?

Standard Chartered recently received a virtual banking license from HKMA in Hong Kong. It is a completely standalone virtual bank with respect to management. Various banks like Standard Chartered are testing the waters now. They want to have a first-mover advantage and be the first ones to overcome challenges and solve problems. Each bank has a different challenge and different experience. For instance, in the US, Mobile Bank is a university bank.

All of its customers are university students. It offers them small loans, deposits and ATM services. It got acquired by a traditional bank, Commerce Bank, for around USD $180 million. Some banks are setting up digital banks as a standalone bank, some are partnering with fintech companies and some are acquiring digital banks. There is no right or wrong or good or bad model out there. It is important to be experimental in nature and to be a quick learner.

For instance, N26 is already present in 19 countries with a very high penetration rate and has been able to expand quickly due to its presence on the cloud. Banks are now watching and learning from these use cases. I believe that the challenges are much more regulatory in nature and less digital. Customers would like to use digital services because of the convenience they offer.

In Hong Kong, it takes about one year to get a banking license. Regulators too are new in the space and are working to ensure that customers’ money is safe.There is a time lag and regulations will evolve. Be it a digital bank or a traditional bank, all banks need to comply with regulations. However, for a digital bank, regulators are trying to make [the process] suitable for both the banks and themselves.

Standard Chartered just received a virtual banking license in Hong Kong. What are the implications for existing bank branches? Does it mean that branches will become obsolete?

In spite of the existence of virtual banks, many banks are opening branches in the US. Bank of America said that it will open 900 more branches. Why are they doing this, especially when there is a popular belief that branch banking will become obsolete? It is important to understand the difference in demographics of a country. Each country is different. India, Pakistan, Bangladesh and African countries have small banked populations.

Singapore and Malaysia, on the other hand, have large banked populations of 95% and 92%, respectively. For countries where the banked population is very high, opening a new branch may add less value in the sense that there will be a smaller number of additional customers that will join. But in countries where financial inclusion has not reached its optimum level, banks will continue to have branches.

One may argue e-money and digital money [will instead dominate], but I believe that they have a long way to go. DBS in India launched Digi money and their services do not use e-KYC. The customer is required to go to a local coffee shop and verify himself/herself to open an account. This may be possible in cities, but in small villages there are no coffee shops. Hence, the process is not 100% digital and there are challenges.

What is the implication of a virtual banking license for the digital banking services of a bank?

A virtual banking license is required in many countries to operate a bank digitally. These license regulations require a sort of discipline in terms of capital requirements. When a small bank or fintech firm wants to offer virtual banking services, they have different capital requirements and restrictions.

Regulators, after years of research and firsthand experience, are now determining what the optimum capital requirements are for a digital bank. They are concerned about people’s money and place more emphasis on deposits than on lending. Banks need to comply with regulators in the sense of how much money can be deposited and how much money can be lent. These requirements are different for traditional and virtual banks.

As an industry expert, what do you think will be the next biggest change we are going to see in banking services in the next 5 years?

Certain banks will be wiped off in the next 10 years. There are banks that are doing a lot such as Standard Chartered, DBS and Yes Bank, and then there are banks that believe that they will be fine and are not doing anything substantial.

It is very clear that banks that are not evolving and are not doing enough in the digital space will be wiped off. When I say wiped off, I mean that the cost of doing business will be high, customer bases will start shrinking and the profit pie will become smaller.

Banks have depended on loyalty to gain generation after generation of customers, but this does not hold true anymore and is being replaced with a focus on service. The loyalty of a customer in today’s world is based on good service.

Banking will evolve. The threat of new entrants to a bank is extremely high. Google and Facebook are developing their own solutions. Countries too are now issuing e-money. In China, e-money and wallets have become so popular that is hard for traditional banks to do what they want. Incumbent banks will have to evolve, and new journeys will be undertaken.

Professor Rajesh Nair (center) is a man on a mission “to reach one million students and create 100,000 entrepreneurs in 10 years”. In conjunction with Malaysian Global Innovation and Creativity Centre’s (MaGIC’s) Innovation Week, he delivered a talk entitled “Creating 10x Entrepreneurs in the Future”. Rajesh is a professor of practice and senior lecturer of innovation and entrepreneurship at Asia School of Business, a new business school in collaboration with MIT Sloan located within Bank Negara Malaysia’s building.

Listening to him speak, his passion to uplift student communities and impart his ideas are clear. Born into humble beginnings in a small village in India, Rajesh’s first exposure to electronics happened when he took his radio to a repairman when he was 12. His inquisitive nature was piqued, “Before then, I thought little people lived inside the radio singing to us daily.” It was a new beginning for Rajesh. In the next few days, the repairman taught him the basics of electronics. Those few days are a lifelong gift Rajesh will always cherish, “It changed my life.”

As a young adult, he pursued his Bachelors of Engineering and a masters degree in electronic product design at the Indian Institute of Science. Keen on ensuring his product designs were manufacturable, Rajesh enrolled in the University of Massachusetts Amherst for a masters in manufacturing engineering. After some years of working in product design and even founding a startup, Rajesh’s latest qualification is a masters of Science in system design and management from the Massachusetts Institute of Technology. This is where he began seriously thinking about the problem of creating more entrepreneurs.

The Entrepreneurship Stimuli

“Here I was – this kid from a small village who just happened to have the right stimuli at the right time,” said Rajesh, believing that it spurred him on and brought him to where he is today. “There are millions of kids around the world who may not get the right stimuli.” With this in mind, Rajesh set out on a path to create a process that provides students with the right input for entrepreneurship.

He truly believes that the number of entrepreneurs in any community can be multiplied. Many entrepreneurship programs around the world are carried out in a top-down fashion which is not the most effective way to create entrepreneurs. According to Rajesh, the founders and startups that come from these programs are given funding and other resources. Despite this, they often fail. “Because it’s the first time they’re ever doing it. They’re just about learning to walk.”

By giving funds and having them start companies, these founders are not given a chance to learn and fail. Instead, Rajesh thinks the focus should be on exposing kids to entrepreneurship and inspiring them. “Often these programs focus on 25-year-old people. I believe it should be done when they’re 10-years-old because to master these things in your 20s – the rate of learning is pretty steep,” he shares.

Rajesh further explains that once someone becomes an entrepreneur, there is a lot of support given in the form of funding, policies and training. “The bottleneck lies in the conversion point from students to aspiring entrepreneurs.”

Rajesh describes this stage as the pre-entrepreneurship stage where students experience failure. “Every time you fail, you have hit the edge of your competence. Once you master it, you expand your zone of competence,” he said. Rajesh stresses the importance of failure as a learning process, “That is the feedback that the world gives you.”

From Maker to Innovator

Drawing on his own past experience, he attempted to replicate his learning and came up with a framework starting with the maker stage. “The whole idea is to design, make, play. Don’t try to solve any world problems,” he said on the basis of how a child’s creativity works. Surpassing the maker stage, the next step is the innovator stage where problems are found and solved through design thinking. At this stage, empathy is key.

Rajesh explains: “You cannot sit in an air-conditioned room and create a solution for farmers in Sabah.” Promoting immersion and enabling his students to fully appreciate problems, he takes them to meet farmer and fishermen communities and patients in hospitals, all the while armed with tools and 3D printers. Nonetheless, Rajesh knows this is no one-man-show, “Mentors are the most critical missing link.”

Currently, he is working on training young adults from the community to teach school students in his Zero2Maker programs. Even if these students do not embark on entrepreneurship journeys, Rajesh believes they would still gain life-changing knowledge. “These students would have still built valuable skills that would help them in their life.”

This article was originally published on Digital News Asia’s website.

“What are the skills of the future? Whatever that future is?”

This is a question in everyone’s mind: career professionals, employers, students and graduates, academic and practitioners. What “soft” skills should we work on and what “hard” skills should we invest in? But what if the skills of the future are not “soft and hard” but rather “smart and sharp”? Here is the simple premise of this article: a new semantical approach and an articulation of their critical co-existence in action!

Soft and Hard skills – 1972

We are all familiar with the concepts of ‘soft’ and ‘hard’ skills but do you know their semantical history? The soft and hard skill terminology was coined in 1972 by a research team in the U.S. Army to differentiate people who were good at machine operations, coining these skills “hard”, from those who did well in people related, supervision roles, coining them as “soft skills”. And since 1972, this ubiquitous terminology has served us well.

But just like all other fields of study who get to constantly revise critical concepts, we believe that this terminology needs a fresh, new approach. As a business school professor and a leader, I am faced every day with situations where I see either our Asia School of Business students, staff or action learning partners being faced with difficult situations: giving and receiving feedback, managing complex stakeholders, dealing with office politics, and I always wondered “What’s soft about it?”

Dictionaries define the word “soft” with words like smooth, mild, gentle, quiet, tender, and weak. Navigating competing perspectives and cultures does not come smoothly; pitching and presenting projects is not a tender act; handling and delivering critical feedback often is not mild; and dealing with office politics is certainly not for the weak. So why do we still refer to these skills as soft?

In a similarly fashion, calling accounting or learning pivot tables on Excel, ‘hard’ will just petrify people before they can even learn it. Dictionaries define the word “hard” with words like firm, rigid, resistant, free of weakness, unlikely to change, harsh, severe. But should the so-called “hard” skills required today—such as coding, system dynamics, finance, accounting, statistics, machine learning, engineering—be defined by these attributes?

Considering the constant changes in technology, and the subsequent need for users to adapt, these characteristics hardly seem fitting. And that’s why, at ASB, I have decided that is time for a semantical update and together with MIT Sloan Professor and ASB Dean and President, Charlie Fine, we are proposing two new concepts “Smart Skills” (replacing soft) and “Sharp Skills” (replacing hard) and a new interpretation of how we should think of these skills in action.

Smart and Sharp! Is this just a matter of semantics?

You are probably asking yourself now “Does it matter how we name the skills, as long as we have them?” In an attempt to answer this question, allow me to share a quote from UC San Diego Professor Lera Boroditsky, a leading cognitive scientist in the fields of language and cognition and former faculty at MIT.

“By choosing how you frame and talk about something, you are causing others to think about it in a specific way. We can drastically change someone’s perspective by how we choose to talk about and frame something.”

Think about this. Narratives are created over time; a few years back, catfish was only a fish but in today’s verbiage, it has a whole new meaning. We assign new meanings to words every time we speak in a particular context and hence, Charlie and I believe that both these skill sets i.e., smart and sharp, need to be looked at in light of the roles that each play in our day to day lives.

“The job is easy, the people are not!”

This is the most important lesson I have learnt from one of my colleagues, Professor Nancy Waldron, Lasell College. But the second most important lesson I have learnt is that I am people! And so are you and the person next to you. Humans are complex algorithms: think computers but with mood swings, hunger pangs, and plenty of ego that need constant validation; therefore the need for smart skills to “augment our own humanity” such as becoming cognitively ready, develop our adaptability and humility, learn to listen and to follow, and so much more.

Same goes for “sharp skills”. We need to constantly learn how to optimize business solutions using science based management, data analytics and analytical reasoning, we have to become digitally literate and employ system dynamic thinking. And we cannot say, once you have learnt these skills, you are done. These skills need constant updating, they need to be sharpen at all times!

“Smart skills are co-developed with other humans, and sharp skills are co-developed with computers.” ASB Professors Willem Smit and Shien Jin

At ASB, we want to teach both practical and theoretical applications of these skills. Further, we want our students to be able to blend smart and sharp skills so they are effective in their work organizations. While teaching “sharp” skills in the classroom is doable, can one teach “smart” skills such flexibility, willingness to learn, innovation, open mindedness?

At ASB we believe that we can! How? Action Learning!

Blending Smart and Sharp through Action Learning!

One of my roles at ASB is to run our award-winning Action Learning Program, during which, our global students work with companies from all over SE Asia and beyond to solve various business challenges. When we designed our learning experience at ASB, Charlie Fine had the vision to build a transformative curriculum that activates and combines at all times the smart and sharp skills together in order to produce the market ready and principled leaders that our mission promises!

During each of the 5 semesters of the almost 2-year MBA, we send our students to work with various projects all across SE Asia and beyond, to address business challenges that our ASB business partners face: marketing, operations or finance but in this process, they also learn how to become culturally sensitive, to become emotionally mature, to be both humble and confident, and so much more.

How do we do it? Not only that we place these global students in diverse student teams, which is a given, but we send them to work with these companies 2 to 3 times each term. A very expensive and controversial decision, but one that truly articulates the smart and sharp skills in action.

Why do I say this with so much confidence? Because it works! Maybe the first time you go on site in a remote corner of the Philippines to formulate an integer programming model for scheduling a food processing factory, and teaching the plant staff how to use the model they developed, you think wow, this is a big challenge!

What we actually learnt from observing and supporting our students over the past 4 years, is that the first onsite experiences are all about smart skills: knowing when to listen and when to speak, keeping your ego in check, accepting that you are no longer the smartest person in the room, balancing your emotions when you had a 12h day that is still not over. Believe me when I say, that the programming model looks a lot easier in comparison.

And like one of our MBA alumni, Jack Farrell, said, “Learning how to navigate business challenges and cultural ambiguities is one of the biggest takeaways from my action learning projects. I say we are the ‘Real-World MBA’ operating in the most dynamic region around the globe.”

By the second time you go onsite, you might recognize some of the patterns not just in yourself but in your team mates and stakeholders, you have probably received some painful feedback in your 360-peer evaluation and you are a lot more introspective.

And by doing this over and over again, each semester for at least a couple of times, you learn about highly diverse cultures, you start to see various political and strategic perspectives, and you get exciting opportunities to test your growing smart and sharp skills in various industries, companies, and positions before graduation. This is our recipe to develop principled, transformative and market ready leaders: smart and sharp in action!

At Asia School of Business we are just at the beginning of our journey and we have so much more to learn. But we confidently believe that the latest generation of management students and practitioners need a full suite of smart skills to navigate the complex organizations and ecosystems that drive today’s economy, as well as sharp faculties for cutting-edge analysis of complex systems.

So, let’s get smart and sharp at ASB!

———–

The author Professor Loredana Padurean would like to extend special thanks to her co-author Professor Charles Fine, and recognize the editorial contribution of ASB MBA student Devika Manoj Made, ASB Professors Professor Willem Smit, and Professor Shien Jin and Ms. Iwona Fluda, Founder and CEO Creative Switzerland for their feedback.

ASB Assistant Professor Melati Nungsari began her research of matching markets in an unconventional way: through signing up for dating websites. “I was on all of these websites just to see how they worked, from Star Trek Dating to Farmer’s Only to JDate. I covered all cultures, religions, and races pretty well,” she says. “Before this, no researchers had looked at online dating at all.

Ten years ago, it was nonexistent.” Her recent working paper covers the tradeoffs between quality and fit in matching markets including, but not limited to, dating websites. In it, she argues that placing a higher weight on fit over quality results in a better match for you while simultaneously benefitting everyone else on the platform. In these markets, there are two types of traits by which people evaluate matches: vertical traits (quality) and horizontal traits (fit).

Vertical traits are those that everyone evaluates similarly, such as school rankings (a higher ranking being more favorable). Horizontal traits, on the other hand, represent preferences that are valued differently by different people, such as a preference for cats over dogs. Melati’s research is also unique because it presents a more realistic version of matching markets than previously seen in the literature.

“Past papers simplified these markets, assuming that people only cared about one vertical trait. In this paper, we consider a multidimensional array of traits and how placing weight on different traits creates interesting externalities.” Some of these externalities are straightforward, such as rivalry externalities. When students place a lot of weight on a vertical trait like school rankings, there will be increased competition for a relatively fixed number of spots, forcing many to accept poorer matches as a result.

But there are also less obvious externalities such as intramatch externalities, which assume that you only choose matches based on maximizing the match value to you rather than your partner. Though you may be searching for the highest-quality partners, you are more likely to be rejected if the partner finds that you are a low-quality match. Melati identifies three ways to correct for these inefficiencies: pricing, segmentation, and curation.

Pricing works by limiting self-selection into certain markets, preventing low-quality participants from lurking indefinitely in hopes of finding a high-quality match. Per-match pricing can also be effective on some platforms, especially where there is a high level of curation. Segmentation occurs when platforms cater to a specific market with similar preferences on both sides.

When horizontal traits are important, segmentation is an effective way to enable connections between participants (think back to the Star Trek Dating platform). On the other hand, segmentation is less effective when applied to vertical traits, which gives rise to “elite” platforms such as BeautifulPeople. Why? “Because people lie,” Melati says. “They lie on applications, on dating platforms, and when selling on eBay.

For example, if you’re running a school that only caters to rich people, more people will lie about their income. But you would never lie about your preference for cats over dogs, because people don’t uniformly value cat lovers.” She also sees curation, or restricting choice, as effective in some matching markets.

For example, marriage-minded dating platforms such as Match and eHarmony don’t allow their members to see the full range of potential matches, instead offering up small “batches” of potential matches for consideration. This has three benefits. First, it allows platform designers to maximize the total value of matches in the market by presenting participants with higher fit matches they may not have otherwise considered.

Second, it prevents the “paradox of choice” faced by participants who are overwhelmed with too many options. Third, platform operators can provide curation as a value-added service, and thus charge more for it. This research has implications for more than just singles. Melati believes platform designers can learn from these findings by paying better attention to the behavior of participants.

She urges managers to study how participants weigh the tradeoffs between different matches, as each person’s actions has consequences for every other member of the platform. Without knowing customers and their preferences well, managers could be missing out on crucial value-adding traits or matching methods. Worse, if participants are repeatedly presented with poor matches or feel they are lied to by others, the credibility of the platform will erode.

But what about the participants in matching markets? Melati advises giving more consideration to horizontal traits. For example, when evaluating schools, evaluate the curriculum and teacher quality in addition to the rankings. Although horizontal traits are often more difficult to assess than vertical traits, she argues that it is worth the effort to investigate matches for fit as well as quality, because it will be easier to find an overall better match that is aligned with your preferences.

As far as dating goes, Melati hasn’t needed to put this advice to the test herself. “I was already dating my husband before I started this research,” she says. However, she recognizes the benefit of platforms as a convenient way to get better matches. “Our lives have become busier, so it’s harder to meet people. There are many people out there who genuinely want to find somebody.”

Category: Thought Leadership